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In economics
Economics

File:Ballard Farmers' Market - vegetables.jpgEconomics is the Social sciences that studies the Production theory basics, Distribution , and Consumption of Good and Service ....
, the monetary base (also base money, money base, high-powered money, or, in the UK
United Kingdom

The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom , the UK or Britain,is a sovereign state located off the northwestern coast of continental Europe....
, narrow money) is a term relating to the money supply
Money supply

In economics, money supply, or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits....
, the amount of money
Money

Money is anything that is generally accepted as payment for goods and services and repayment of debts. The main uses of money are as a medium of exchange, a unit of account, and a store of value....
 in the economy. The monetary base comprises only coin
Coin

A coin is a piece of hard material, usually metal or a metallic material, usually in the shape of a Disk , and most often issued by a government....
s, paper money, and commercial bank
Commercial bank

A commercial bank is a type of financial intermediary and a type of bank. Commercial banking is also known as business banking. It is a bank that provides checking accounts, savings accounts, and money market accounts and that accepts time deposits....
s' reserves
Bank reserves

Bank reserves are banks' holdings of deposit accounts in accounts with their central bank , plus currency that is physically held in bank vaults ....
 with the central bank
Central bank

A central bank, reserve bank, or monetary authority is the entity responsible for the monetary policy of a country or of a group of member states....
. Broader measures of the money supply include the public's bank deposit
Deposit account

A deposit account is a Current account at a banking institution that allows money to be deposited and withdrawn by the account holder, with the transactions and resulting balance being recorded on the bank's books....
s (checking, saving, etc.). These measures of money are typically classified as levels of M
Money supply

In economics, money supply, or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits....
, where the monetary base is smallest and lowest M-level: M0.






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In economics
Economics

File:Ballard Farmers' Market - vegetables.jpgEconomics is the Social sciences that studies the Production theory basics, Distribution , and Consumption of Good and Service ....
, the monetary base (also base money, money base, high-powered money, or, in the UK
United Kingdom

The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom , the UK or Britain,is a sovereign state located off the northwestern coast of continental Europe....
, narrow money) is a term relating to the money supply
Money supply

In economics, money supply, or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits....
, the amount of money
Money

Money is anything that is generally accepted as payment for goods and services and repayment of debts. The main uses of money are as a medium of exchange, a unit of account, and a store of value....
 in the economy. The monetary base comprises only coin
Coin

A coin is a piece of hard material, usually metal or a metallic material, usually in the shape of a Disk , and most often issued by a government....
s, paper money, and commercial bank
Commercial bank

A commercial bank is a type of financial intermediary and a type of bank. Commercial banking is also known as business banking. It is a bank that provides checking accounts, savings accounts, and money market accounts and that accepts time deposits....
s' reserves
Bank reserves

Bank reserves are banks' holdings of deposit accounts in accounts with their central bank , plus currency that is physically held in bank vaults ....
 with the central bank
Central bank

A central bank, reserve bank, or monetary authority is the entity responsible for the monetary policy of a country or of a group of member states....
. Broader measures of the money supply include the public's bank deposit
Deposit account

A deposit account is a Current account at a banking institution that allows money to be deposited and withdrawn by the account holder, with the transactions and resulting balance being recorded on the bank's books....
s (checking, saving, etc.). These measures of money are typically classified as levels of M
Money supply

In economics, money supply, or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits....
, where the monetary base is smallest and lowest M-level: M0. Base money can be described as the most acceptable (or liquid
Market liquidity

Market liquidity is a business, economics or investment term that refers to an asset's ability to be easily converted through an act of buying or selling without causing a significant movement in the price and with minimum loss of value....
) form of final payment.

"Open market
Open market

In economics, the open market is the term used to refer to the environment in which Bond are bought and sold.To intervene in the "business cycle", a central bank may choose to go into the open market and buy or sell government bonds, which is known as open market operations to increase reserves....
" operations are monetary policy
Monetary policy

Monetary policy is the process by which the government, central bank, or monetary authority of a country controls the supply of money, availability of money, and cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy....
 tools that affect directly the monetary base
Monetary policy

Monetary policy is the process by which the government, central bank, or monetary authority of a country controls the supply of money, availability of money, and cost of money or rate of interest, in order to attain a set of objectives oriented towards the growth and stability of the economy....
; the monetary base can be expanded or contracted using an expansionary policy
Expansionary monetary policy

Expansionary monetary policy is Monetary_policy that seeks to increase the size of the Money_supply. In most nations, monetary policy is controlled by either a Central_bank or a Finance_ministry....
 or a contractionary policy
Contractionary monetary policy

Contractionary monetary policy is monetary policy that seeks to reduce the size of the money supply. They are fiscal policies, like lower spending and higher taxes, that reduce economic growth....
, but not without risk.

See also

  • Money supply
    Money supply

    In economics, money supply, or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits....


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